Geopolitical tensions in West Asia continue to shape market sentiment, with the U.S.–Iran conflict now entering its sixth week. However, market reactions appear more measured, suggesting investors are increasingly adopting a wait-and-watch approach rather than responding with heightened risk aversion. Repeated rhetoric, particularly from the U.S., has had a diminishing impact on market behaviour of late, with recent statements failing to trigger significant reactions, indicating that participants may be factoring in a degree of fatigue in the conflict dynamics.

Foreign institutional investor (FII) outflows remain a key pressure point. Sustained selling reflects a calibrated de-risking strategy amid elevated crude prices, persistent geopolitical uncertainty, and a broader risk-off environment. Until there is a visible moderation in these outflows, the market is likely to struggle in sustaining a meaningful upside.

Crude oil prices, hovering in the $110–113 range, continue to act as a significant overhang. Elevated prices raise concerns around inflation, widen India’s import bill, and add pressure on the currency. However, the relative stability in the rupee, trading within the 92.50–93.20 range, suggests active intervention by the Reserve Bank of India, which has helped contain volatility and provide some support to overall sentiment.

At this stage, market direction will largely depend on how the geopolitical situation evolves. While the initial phase of heightened fear appears to have been priced in, investors remain cautious and are awaiting clearer signals before taking more decisive positions.

Technical View 

NIFTY 50

Nifty 50 is showing early signs of recovery after recent weakness, but the structure is not yet strong enough to confirm a reversal. The index is currently hovering near the 23,000 zone, which continues to act as an immediate resistance level. A sustained move above this level can trigger a short-term pullback towards 23,200–23,500. On the downside, 22,800–22,750 is acting as a near-term demand zone, followed by a stronger support at 22,550. Momentum indicators like RSI have recovered from oversold territory but still indicate neutral to weak strength. Overall, unless Nifty sustains above 23,000, the broader trend remains cautious. 

BANK NIFTY

Bank Nifty is attempting a recovery, but the overall structure remains weak. The index is facing immediate resistance in the 52,800–53,000 range, and only a decisive breakout above this zone can open the path towards 53,600–54,000. On the downside, immediate support is placed at 52,200–52,000, followed by a stronger base near 51,800. Momentum remains subdued, and the index needs confirmation through a strong close above resistance to shift sentiment. Until then, the trend remains sideways to weak with limited upside conviction.